Facebook, Google and Amazon may use payments data for e-tail dream

India's payments space has the growth potential of becoming a trillion-dollar industry in the next five years.

Google, Facebook and Amazon, who entered India’s digital payments market through the United Payments Interface (UPI), may use the payments transaction data to support their retail offerings, say experts.

Google recently launched a shopping homepage here. Facebook-owned Instagram also plans to bring shopping on Instagram to India. “Shopping on Instagram is currently available to businesses in 46 countries, and we are gradually expanding to additional partners in countries around the globe, including India,” an Instagram spokesperson said. Amazon has been a leading player in the e-commerce space.

India’s payments space has the potential of becoming a trillion-dollar industry in next five years, as predicted by NITI Aayog. According to experts, though this alone is a big enough incentive, the India story for these behemoths is larger and commerce is merely a stepping stone.

“The digital payments opportunity seems to have certainly caught the eye of global technology giants, who are creating platforms for all encompassing engagement of end customers. Commerce is a big use-case, and payments is an essential part of commerce,” said Kalpesh J Mehta, partner, Deloitte India.

“Payment behaviour is seen to generate data sets, which lets such platforms enrich their customer profile that can be consolidated and monetised. This seems to have galvanised the interest of such large platforms.”

All three firms have also been pushing and building upon their payments offerings, including loans and cards. Commerce is the most scalable use of payments data and these global players can use payments data to push certain retail products and can also use this commerce history to proposition certain financial products like loans, said a banker.

UPI has seen exponential growth since introduction, the volume of UPI transactions crossed 500 million in November and the value of the UPI transactions in November stood at Rs 822.32 billion. However, it is not lucrative on the basis of the charges alone yet, and it is the extensive dataset and cross-selling opportunity it provides that has attracted both banks and non banks to the platform.

According to a CRISIL report, the size of the retail market was Rs 49 trillion in 2016-17, of which only Rs 3.5 trillion is organised retail and Rs 700 billion is e-retail. The same is the case with payments. Total personal consumption expenditure in India stands at Rs 1.5 trillion, with more than 90 per cent of retail transactions happening in cash, said Deloitte.

According to Mahesh Makhija, leader - emerging technologies, EY India, moving into payments allows these players to capture and control a larger portion of their value chain and provide better experience to their customers.

While the current size of e-retail market and the economies of the UPI space does not signal huge profitability in the near term, the potential for digitisation is massive. It is this potential market that the global players are investing for.

Amazon India has invested over Rs 4 billion this year into Amazon Pay. Both Amazon Pay and Google Pay have also partnered with leading banks as well as various e-commerce platforms. WhatsApp Pay is pushing to expand its services to more people and working closely with the government, National Payments Corporation of India, and multiple banks, according to a WhatsApp spokesperson.